Things Businesses, Owners, and Executives Should Know About Being in Court

Normally, when a jury finds for a claimant, but then awards no damages, then that is viewed as a defense verdict. After all, damages are generally a required element of a claim.

But if the jury finds for a claimant, but awards zero damages – are they a “prevailing party”? At least one panel of the Georgia Court of Appeals says yes.

In HA&W Financial Advisors LLC v. Johnson, an employer (HA&W Financial) sued an employee (Johnson) under an employment agreement. A15A2298 (Ga. App. April 19, 2016). The contract had a contractual attorneys’ fees provision that entitled “the prevailing party” to recover fees if either party sought to enforce the agreement.

Of note (especially to me given my focus), HA&W Financial originally sued in part to enforce a non-solicit restrictive covenant, but dismissed the claim without prejudice.

HA&W Financial’s other claims involved a suit on promissory notes, to which Johnson denied any liability.

HA&W Financial’s other claims, and Johnson’s counterclaims, went to the jury and the jury verdict form asked the jurors to find for (1) HA&W Financial and award damages; (2) Johnson and award damages, or (3) simply find for Johnson.

Judge Barnes, writing for her panel, affirmed the trial court’s finding that Johnson was the “prevailing party,” even though the jury did not award him any damages. The Court of Appeals recognized that “the jury expressly found in favor of Johnson, and Johnson in his status as defendant had no relief imposed against him.” Further, the Court noted looked at the “net result” of the case:

. . . the net result of the verdict in this case was that the outstanding balance and accrued interest on the loans that formed the transition incentive payment that HAW Financial made to Johnson were forgiven, entitling Johnson to keep the funds without any further recourse by HAW Financial. Thus, to the extent that either party obtained any relief on the merits as the result of the verdict in this case, it was Johnson, which further supports the trial court’s finding that he was the prevailing party entitled to attorney fees and expenses. Cf. Hendrix v. Stone, 261 Ga. 874, 875 (2) (412 SE2d 536) (1992) (trial court did not err in finding that party whose child support obligation was reduced by jury verdict was the prevailing party).

(Bold added).

And the Court further dismissed HA&W Financial’s argument that the attorney’s fees provisions in the notes at issue superceded the employment agreement’s “prevailing party” provision. This was because the Court viewed the different contracts to be complimentary rather than contradictory.

Aaron Chausmer, Your Host

I'm a business litigator based in Atlanta, Georgia with an emphasis on restrictive covenants (non--competes) and trade secret matters, who doesn't mind the occasional business divorce or fraudulent transfer action.